More than 620,000 U.S. homeowners have received their share of the $25 billion worth of payouts stemming from the National Mortgage Settlement with the nation’s most powerful financial institutions. In Nevada, 20,000 residents have collected $97,000 worth of the overall payouts, yet for those who have lost their homes stemming from mortgage scandals in 2009 […]
More than 620,000 U.S. homeowners have received their share of the $25 billion worth of payouts stemming from the National Mortgage Settlement with the nation’s most powerful financial institutions.
In Nevada, 20,000 residents have collected $97,000 worth of the overall payouts, yet for those who have lost their homes stemming from mortgage scandals in 2009 and 2010, receiving a check for a few hundred or few thousand dollars doesn’t come close to compensating for the loss of a home and the emotional distress that came with it.
“It’s a slap in the face,” Nina Griffin, a Nevada resident in the midst of wrongful Bank of America foreclosure, told the Las Vegas Sun in 2012 in the lead-up to the settlement deal.
Dexter Vernon of California refers to the settlement as a “joke.” After losing his home in the foreclosure scandal, he received a check for $500.
“It’s just frustrating,” he told the local CBS affiliate. “I mean you can’t fight them, because you’re not big enough to fight them, and they just play that little game.”
When Vernon learned of the settlement, he and his family imagined a scenario of justice — one that would allow him to rebuild his credit and get back on his feet — but his vision didn’t become reality.
“I don’t want freebies, but I wanted to be treated honestly and fairly,” he said.
Vernon wasn’t alone in his foreclosure agony. In California, one in 21 homes were foreclosed on in 2009, the height of the crisis. In Nevada and Florida, one in 17 homes went through the foreclosure process, according to the Institute for Children, Poverty and Homelessness. In 2010, 2.9 million properties went through foreclosure — up more than 200 percent from 2005.
While many Americans stayed with friends and family members to get through the tough times, those with nowhere else to turn struggled with homelessness.
Sheri West owned a house in Cleveland, Ohio, and was employed as a maintenance worker at an apartment complex. She initially purchased the house with her husband, who left her with the full mortgage.
Under the difficult circumstances, she surrendered her home to foreclosure in 2009. She spent a year living with friends and family before finally checking herself into a shelter.
“No one could have told me that in a million years: I’d wake up in a homeless shelter,” she told the New York Times. “I had a house for homeless people. Now, I’m homeless.”
Confusion leads to a settlement
The settlement resulted from what was known as the “robo-signing” scandal after revelations that loan servicers were foreclosing homes on a widespread basis without properly verifying legal documents.
In response to the allegations, the loan servicers hired a slew of consultants to look at foreclosures case by case. The process was costly and time-consuming and didn’t allow for reviews of all homeowners who were potential victims of the robo-signing scandal.
Only 439,000 homeowners specifically requested a review out of the 4 million borrowers who are now on the receiving end of the settlement.
While the servicers didn’t admit fault, they came to a revised settlement that allowed all homeowners who had gone through the foreclosure process between 2009 and 2010 to apply for some form of monetary compensation.
Roughly 4.2 million American borrowers were eligible for some form of payout, ranging from $300 to $125,000.
Bankers patting themselves on back
As homeowners collect checks representing a small fraction of assets lost, the banks involved in the robo-signing scandal — Bank of America, Citi, JPMorgan Chase, Ally/GMAC and Wells Fargo — are applauding their own efforts to make peace with American homeowners.
“Wells Fargo is fully committed to the National Mortgage Settlement’s success, and sees the effort as an important complement to our overall, ongoing efforts across the country in helping homeowners avoid foreclosure,” Michael DeVito, Wells Fargo’s executive vice president for default mortgage servicing, said in a press release. “The mortgage payment relief and loan refinancings are making a meaningful difference in the lives of families who benefit from them.”
Not exactly, according to Las Vegas, Nev., attorney Matthew Callister, who regularly sues banks for wrongfully foreclosing on Nevada residents. He’s come to the conclusion that banks are more profitable when they foreclose rather than negotiate.
“It’s not a settlement, it’s a sellout,” Callister told the Las Vegas Sun.